Dive Brief:
- Traditional annual performance reviews are quickly losing ground in the American workplace, but, according to an article from Knowledge@Wharton, the replacement strategies have yet to prove they are any more effective than what they are replacing.
- The article notes that large employers such as Adobe, Kelly Services, GE, Deloitte and PwC, among others, have shut down annual performance reviews, and this trend seems to extend to smaller employers as well.
- Knowledge@Wharton cites a survey by leadership advisory firm CEB that found that only 1% of Fortune 1000 firms in 2011 had jettisoned the annual review. Four years later, the tally had risen to 12%. But, the article notes, experts such as Wharton management professor Peter Cappelli, who has researched the usefulness and accuracy of performance reviews, says the jury is still out on replacement strategies. For example, the CEB survey also found that at employers where annual reviews had been eliminated, measures of employee engagement and performance dropped by 10%.
Dive Insight:
For HR leaders potentially in the process of rethinking performance reviews, the Knowledge@Wharton article is a great resource for considering the alternatives before a final decision. There is always the possibility that some aspect of the annual performance review might remain in place, for example.
Some newer, technology-based alternatives may in fact cut down on actual interaction between employees and their immediate supervisor or managers — an odd yet completely possible outcome according to the article. Whether employers use the classic annual review or a newer alternative, there is also a potential for mental duress caused by the performance review process in general, so employers need to be cognizant of that fact as well.
One large employer, IBM, chose an employee-centric path for creating and adopting its new review process, CheckPoint. IBM HR crowdsourced ideas from 380,000 workers across 170 countries using its internal social media platform, receiving 75,000 views and hundreds of thousands of employee comments. The new IBM review app will focus on shorter-term goals and the desired feedback frequency (about quarterly). When the year closes, managers will assess whether employees have exceeded or achieved expectations across five key indicators while seeking ideas for improvement.
